CBA opens innovation lab in Hong Kong

James Eyers

In a strategic move designed to tap the thinking of entrepreneurs based in leading offshore fintech hubs, Commonwealth Bank of Australia has opened an "innovation lab" in Hong Kong and will open a similar facility in London in July.

Launching the lab in One Exchange Square, in downtown central Hong Kong, on Thursday, the Secretary for Financial Services and the Treasury of Hong Kong, KC Chan, said the start-up scene there is thriving and "fintech is an area that has great potential in our city.

CBA's model of engagement with start-ups differs to rivals Westpac Banking Corp and National Australia Bank.

Through its venture capital fund Reinventure Group, Westpac has taken equity stakes in several fintech start-ups, including peer-to-peer lender SocietyOne and payments platform PromisePay. NAB established NAB Ventures last year using a similar model, which allows the banks to gain insight into new technology while giving the entrepreneurs freedom to evolve their start-ups.

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'Partnership model'

CBA does not invest equity in start-ups. It describes its collaboration as a "partnership model", with engagement based around particular bank projects built on specific customer problems.

"We would much rather work together to create solutions that leverage not just what the start-ups bring to the table, but also the enormous assets we bring to the table," CBA's group executive for institutional banking and markets, Kelly Bayer Rosmarin, said.

"As the partnerships evolve, we will negotiate the right terms and basis [to] suit that specific partnership. We don't apply a blanket rule."

In a presentation in Hong Kong on Tuesday, Ms Bayer Rosmarin pointed to a recent study by EY, which showed Hong Kong has the highest rate of fintech adoption in surveyed markets, with 29 per cent of people having used at least two fintech products in the past six months. Around the world, the top reason for engaging with a fintech provider is the ease of opening an account, EY said, while the top reason for not engaging is a lack of awareness that fintech alternatives existed.

Ms Bayer Rosmarin said the opening of the new labs was "not in any sense some sort of marketing ploy.

"It is a substantive approach, to make sure we are not only engaging with the fintech community, but to make sure our staff are highly engaged and we are tapping into the creative ideas they bring to the table on offshore locations, and that we engage with clients on the ground in the process of co-creation. This has been more successful than we could have hoped for in Sydney."